Shell, Phillips 66 consider selling stakes in $3.5 billion Explorer pipeline, sources say

• Explorer is among the most critical U.S. refined products pipelines, spanning over 1,800 miles with capacity of 660,000 barrels per day in the south and 450,000 barrels per day in the north, transporting gasoline and jet fuel from Texas through the Midwest to Chicago
• Greenhill (Mizuho affiliate) and RBC Capital Markets are running an early-stage auction process; co-owners Energy Transfer and MPLX (holding the remaining 39%) may also sell if buyers show interest in acquiring the entire pipeline
• The potential transaction follows last year's $9 billion sale of the Colonial pipeline to Brookfield Infrastructure Partners, highlighting continued strong appetite from financial and strategic buyers for midstream energy assets

Summary

Key Transaction Details:

Shell and Phillips 66 are exploring the sale of their combined 61% stake in the Explorer refined products pipeline, with the entire asset potentially valued at approximately $3.5 billion. Greenhill (a Mizuho affiliate) and RBC Capital Markets have been retained to manage the auction process, currently in early stages.

Asset Overview:

The Explorer pipeline is a critical U.S. energy infrastructure asset operational since the early 1970s, spanning over 1,800 miles. It transports gasoline, jet fuel, and other refined products from Texas through the Midwest to Chicago area endpoints, with capacity of 660,000 barrels per day (southern portion) and 450,000 barrels per day (northern section). Explorer ranks among the most important U.S. refined products pipelines alongside Colonial.

Ownership Structure:

While Shell and Phillips 66 control 61%, Energy Transfer and MPLX own the remaining stake. Sources indicate these minority stakeholders could potentially contribute their holdings if buyers show strong interest in acquiring the entire pipeline.

Market Context:

The potential sale reflects heightened demand for energy infrastructure assets, particularly from financial buyers attracted to steady cash flows. Strong valuations are encouraging existing owners to divest and redeploy capital into core or higher-growth operations. This follows last year's $9 billion sale of the Colonial pipeline to Brookfield Infrastructure Partners, which similarly began as a partial stake sale before converting to a complete acquisition.

Caveat:

Sources cautioned no deal is guaranteed, and discussions remain preliminary.